Having recorded its highest-ever monthly sales, Ather Energy is gearing up to face fiercer competition from the likes of Ola Electric and Hero, the latter having its own range of e-scooters whose capabilities match Ather’s own. With its most recent round of funding having come through, Ather chief business officer Ravneet Phokela in an interview talks about meeting customer demand, the brand’s core focus and its equation with its oldest investor-turned-rival. Edited excerpts:
The electric vehicle (EV) sector in general has had excellent sales in October. As far as Ather is concerned, what do you primarily attribute this to? Is it the easing of supply chain issues, the continuing growth in demand or a wider retail network?
It’s a combination of things, I think the primary factor is the easing of the supply chain across the board. It’s an issue we’ve been grappling with certainly at Ather, but also as an industry. And, on top of all this, just the ability of the supply chain, even with the more traditional mechanical components, where it’s not a question of capability or fundamental capacity. It’s just the ability to ramp up at the pace we expected to. The fundamental problem of the market in the last two years is that the sales numbers did not reflect the reality of the underlying demand. It’s always been a question of supply. Earlier it was about the product not being strong enough.
To what extent have these supply chain issues been resolved? What kind of an order book do you have? What kind of waiting period can customers expect?
Our issue has never been manufacturing capacity. Capacity has always been there, the components were not. With components coming in, we’re looking at reducing our waiting period to as low as two, three weeks, depending on the city. There’s more predictability in supply. But a lot of the issues that gave us sleepless nights have been resolved.
With your most recent round of funding having come through in October, how is it being utilised to further streamline the supply chain? How does Ather intend to expand capacity?
Capacity expansion has two parts to it. One is your manufacturing capability, what you can manufacture in a particular month or year. Today we have an annual capacity of about 4 lakh units, roughly 30,000 units a month, which should hold us in good stead for possibly a year or so. We’re already in the market for a new facility, to add a million units in capacity. Setting up the factory is in our control. With regards to ramping up the supply chain, we work with tier 1 and tier 2 suppliers, and now we want to invest in certain key components and the suppliers providing us these components. There are various models where an OEM (original equipment manufacturer) can invest to drive supply-chain capacity. We’ll also be using the funding for geographic expansion and drive predictability.
Where do you see Ather Energy expanding to in the initial run? Any key market that’s been earmarked?
There’s no question, we definitely plan to go international. We’ve got a lot of inbound demand in the last couple of years which we’ve been holding off on. From the Southeast Asian market, large markets which are very competitive in terms of pricing and with a lot of Chinese players, there is the Europe cluster which doesn’t have the volumes but has the paying ability for high-volume products. And then Latin America is a happy balance of the two. The fourth cluster is Africa, and Indian brands do exceedingly well there. Given the pricing of EVs at this point, it’s not a very attractive market. But based on the demand, we just have to figure out which market to enter first. We hope to make an announcement in the next few weeks.
Would a thriving charging network from Ather be essential to operating in these markets?
Compared to what we did in India, charging infrastructure in export markets will come with a bit of a lag. Today we have about 580 fast charging stations and will scale up to 1,500 in a few months’ time. But we didn’t start there. With foreign markets, it’s not a question of plucking something from India and planting it. There is data, homologation, etc, to consider. Fortunately in the case of scooters, not having a fast-charging domain isn’t a deterrent for adoption, as we have seen in India.
Ather continues to operate at the pricey end of the e-scooter spectrum, and with competitors pricing their products on a par with ICE (internal combustion engine) scooters, is that something you match soon?
Either someone will buy a Rs 70,000-80,000 product or they will buy what they think is the most cutting-edge product in the market. Which is why within our portfolio the difference between X and Plus is Rs 20,000. And most of the demand is for the high-end variant. As for our future plans, we will expand our portfolio, we will unlock new price segments. But the fundamental DNA of the company is focused on safety, reliability and consistency, build quality. Those things are non-negotiable. So if we have to compromise on those to cut prices, that’s where we draw a line. We’re not making products for delivery services
Would it be accurate to say then, that while Ola Electric fashions itself as a Tesla of e-scooters, Ather’s approach is more like Apple’s and that of Tesla, which is based on ecosystem benefits, in-house performance and design?
Quality, consistency, build, and drive performance are non-negotiable. And this non-negotiability does come at a cost. There’s a strong integration between hardware and software, stuff that we design ourselves. So in that sense it’s similar to what Apple has.
But both Apple and Tesla have closed ecosystems, while Ather has opened up its charging network to Hero’s Vida. What’s the long game when it comes to Hero, which owns a 35 percent stake in your company? Do you expect some amount of cannibalisation where Hero cashes in on its legacy bike-maker status?
Hero and Ather are very different organisations and brands. They are our biggest investor but there’s no formal collaboration outside of charging infrastructure. We don’t share distribution, supply chain or quality control measures. There is no technology transfer with Hero. We have chosen from the very beginning to work independently knowing that at some point we will have products that would compete (with each other). If we had to collaborate, we’d have done it a long time back. We’d been looking to open up distribution a long time ago, we could have used Hero’s resources and fast-tracked the process.
We have an IP (intellectual property) on charging infrastructure which we left open to any OEM that wishes to adopt it. Hero happened to be the first one to do so. When it comes to infrastructure, it’s silly to compete. It’s silly to have walls guarding infrastructure. We will collaborate wholeheartedly on the infrastructure side and compete vociferously on the product side.
Despite EV brands doing well over the festival season period, there’s a sense that the newer startups are not performing as well, facing frozen subsidies, among other things. Is that likely to hamper the segment or separate the wheat from the chaff?
Today, the government has done a lot for the EV industry. They’ve been patient, they put a lot of money on the table. But they’re not here to give any free lunches. Brands need to invest and build local capability, local design, a local supply ecosystem, buy locally and build a business for the future. If you’re simply going to be relying on importing, rebadging and selling, you’re sitting on a very hollow foundation. Enough time and opportunities have been given.
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